Investors riff on the new era for climate investing
Oct 16, 2023
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Three prominent investors discuss the growing trend of climate tech investments, the most promising sectors in climate investing, and the role of the US government in innovation and funding. They also highlight the significance of naming in climate investing initiatives and the importance of individuals and teams in driving innovation. Furthermore, they discuss the need to marry technical expertise with industry knowledge and the importance of driving demand-side support for clean energy projects. The transition in climate investing focus from mitigation to adaptation is also explored, along with the challenge of aligning government assistance with market demands for climate investing.
The evolving state of climate investing and the role of venture capital in the era of government backing have led to the creation of over 200 new climate investment funds managing $121 billion since 2021.
Investing in adaptation and resilience solutions, such as wildfire prevention technologies and climate-smart agriculture, is crucial in the fight against climate change, with government support playing a vital role in driving investment in these areas.
Deep dives
Investing in Climate Tech: Trends and Opportunities
The podcast episode discusses the evolving state of climate investing and the role of venture capital in the era of government backing. The trend is up, with more than 200 new climate investment funds created since 2021, managing $121 billion. The government's comprehensive green industrial strategy is opening up new investment categories and commercial opportunities in deep decarbonization. The DOE is now focused on bringing commercial projects to scale rather than just scientific research. While there are similarities to past clean tech bubbles, this new era is distinguished by the societal impetus to address climate change, the financial sector's increasing focus on climate solutions, and government policy alignment with climate mitigation efforts.
The Role of Teams and People in Climate Investing
The success of climate tech ventures depends on strong leadership and teams with a combination of inspiring vision, market expertise, and innovative thinking. While technology is important, understanding the broader framework of policy, finance, and investment is crucial. Entrepreneurs need to marry technological innovations with commercialization strategies and engage across policy, technology, investment, and advocacy. Having personnel with industry experience and understanding of target markets, such as utilities or agriculture, can be a significant advantage. Additionally, bringing in talent from diverse backgrounds and sectors, such as tech, finance, and life sciences, can drive innovation and make a difference in addressing climate challenges.
Government Support and Funding Opportunities
The government has allocated historic amounts of funding for clean energy projects and offers various support mechanisms to de-risk markets and promote commercialization. Entrepreneurs are encouraged to explore the funding opportunities provided by the Department of Energy (DOE) and other agencies. These include competitive grants, tax credits, loans, and partnerships. While not all entrepreneurs may be eligible directly, they can still benefit indirectly through state-level programs, utility partnerships, or collaborations with manufacturers. Leveraging government support to expand projects and stimulate demand is essential for achieving the goal of net-zero emissions.
Addressing Adaptation and Resilience
Investing in adaptation and resilience solutions is no longer optional in the fight against climate change. Technologies and innovations that enhance resilience and help communities withstand climate impacts are crucial. This includes technologies for wildfire prevention and management, as well as agricultural practices that reduce emissions and build climate resilience. Government support plays a vital role in driving investment in these areas. Entrepreneurs should consider the potential for public and private partnerships in building resilient infrastructure, implementing climate-smart agriculture, and developing technologies that improve community and ecosystem resilience.
There are a lot of quarterly ups and downs in venture dollars deployed across climatetech. But the trend is generally up. Since 2021, more than 200 new climate investment funds have been created with $121 billion under management, according to CTVC.
Earlier this month, Canary Media Editorial Director Eric Wesoff explored the evolved state of climate investing at Canary Media's live event in Berkeley.
The panel included: Nancy Pfund, managing partner at DBL Investors; Mona EINaggar, a partner at Valo Ventures, and Elaine Hseih, a senior advisor at the US Department of Energy.
They discussed what sectors are most promising, the pathways to commercial success, and what America’s green industrial strategy means for investors.
This episode is brought to you by SPAN, a smart electrical panel that helps homeowners save on their energy bills.Interested in having a SPAN Panel installed in your home? Visit span.io to learn more.
This episode is brought to you by Nextracker, a leading provider of intelligent, integrated solar tracker and software solutions used in solar projects around the world. Learn more at Nextracker.com.
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